Assignment

On

GLOBALISATIONBUSINESS AND LEGAL

ENVIRONMENT

MAHARAJA AGRASEN INSTITUTE OF TECHNOLOGY

ROHINI, DELHI-110086

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

SUBMITTED TO: DR ASHOK BAGRIAL SUBMITTED BY:

VINEET

GLOBALISATION

MEANING

Globalization or globalisation is the process of international integration arising from the interchange of world’s views

products, ideas, and other aspects of culture. Advances in transportation (such as the steam locomotive, steamship,

jet engine, and container ships) and in telecommunications infrastructure (including the rise of the telegraph and its

modern offspring, the Internet, and mobile phones) have been major factors in globalization, generating further

interdependence of economic and cultural activities. Though many scholars place the origins of globalization in

modern times, others trace its history long before the European Age of Discovery and voyages to the New World.

Some even trace the origins to the third millennium BC. Large-scale globalization began in the 19th century. In the

late 19th century and early 20th century, the connectivity of the world's economies and cultures grew very quickly.

The term globalization is very recent, only establishing its current meaning in the 1970s. In 2000, the International

Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment

movements, migration and movement of people, and the dissemination of knowledge. Further, environmental

challenges such as global warming, cross-boundary water and air pollution, and overfishing of the ocean are linked

with globalization. Globalizing processes affect and are affected by business and work organization, economics,

socio-cultural resources, and the natural environment. Academic literature commonly subdivides globalization into

three major areas: economic globalization, cultural globalization, and political globalization

The term globalization comes from English, as base of the word”globalization” which refers to the emerging of an

international network, belonging to an economical and social system. one of the earliest uses of the term

"globalization", as known, was in 1930 - in a publication entitled Towards New Education - to designate an overview

of the human experience in education near-term "giant corporations" was used in 1897 by Charles Russell Tezel to

describe the big national trusts and other large enterprises of the time. Since 1960 both terms began to be used

interchangeably by economists and researchers in social sciences and were used until about mid-1980.

Roland Robertson, a professor of sociology at the University of Aberdeen, was the first person who defined

globalization as "the understanding of the world and the increased perception of the world as a whole. “Martin AL

brow and Elizabeth King, sociologists, define globalization as "all those processes by which the peoples of the world

are incorporated into a single world society.

Globalization can be linked to the local, the national and the regional. On the one hand, a connection is made

between social and economic relationships and networks, organized on a local and / or national, on the other hand,

it connects social and economic relationships and networks crystallized on wider scale the regional and global

interactions. Globalization can refer to those spatial-temporal processes of change, which constitutes the fundament

of the transformation of human concerns in an organization, linking together and expanding human activity across

regions and continents. Without referring to the expansion in space of the connections, there can be no clear and

coherent formulation of the term globalization. A satisfactory definition of globalization must

Address each of these items: extension, intensity, celerity and impact.

KEY ASPECTS OF GLOBALISATION

It is not just large corporations operating in several different countries - they also have developed and brought on

the market products that can be sold packing as well as in Washington. Brands like Coca-Cola, Nike and many others

have become part of the life of a very large number of people. The globalization involves spreading of ideas,

practices and technologies, and it is little more than internationalization and universalization. It is not simply the

modernization or westernization. Certainly it is much more than market liberalization. The globalization has 5

vectors that act on human society, vectors that influence the development of human society. The vectors through

which globalization interacts with society, both locally, regionally, and internationally are: the economic vector, the

military vector, the political vector, the religious vector and the cultural vector.

The discussions and analysis of globalization have distinct economic, political, cultural and social dimensions.

A. relocation and over-territoriality

B. speed and power of technological innovation and the increase of the respective risks

C. growth of multinational corporations

D. how the forming movements of global free markets lead to instability and division.

Delocalization and over-territoriality Manuel Castells has argued convincingly the at in the last 20 years a new

economy has emerged around the world. He characterized it as a new brand of capitalism with three characteristics:

management, productivity and competitiveness. These three elements are functions of the generation of knowledge

/ skills and information processing. Firms and territories are organized in networks of production, management and

distribution and consequently the core of economic activities is global - that means that there is the ability to work in

union, in real-time or at a certain time, on a planetary scale. This last idea is the subject of many analyses and

discussions on globalization. Many activities that implied prior a face-to-face interaction had local character would

now be conducted from distance. John N. Gray stated that there was a significant social and economic exchange

delocalization. Activities and relationships were uprooted from their home places and cultures. An important

element was the division between homework and the classic move to the suburbs. But delocalization goes beyond

that and therefore population growth must face remote systems so that people can live their lives the banking and

retail sales have adopted new technologies that involve a reduced face-to-face interaction, such as online stores. The

notion of distance and area are moved into a new realm. “The space" that we inhabit when using the Internet to buy

goods and communicate may allow us to develop a different sense of place and communication, to which we belong.

The starting point in understanding the world of today is not the size of the GDP or the destructive power of

weapons systems, but that there is more union / overlap than before. It may appear to be about individuals, firms,

sovereign nations and separate cities but the deeper reality is that of multiple connections. Business is a classic

example of such inter-connectivity.

Another crucial aspect of the globalization is the nature and power of multinational corporations. It is significant that

a quarter of world trade was made in 1999 through multinational corporations. Multinationals can affect

communities in different locations and areas. Firstly, they seek to establish or contract manufacturing, service and

sales operations in countries and regions where they can exploit the cheapest labour and the cheapest resources.

Although this can mean wealth brought to the respective community, this form of globalization produces significant

inequalities, because it can also mean unemployment in communities where they have been located previously. The

remuneration paid in the new locations can be minimal and the rights and working conditions of the employees can

be bad. For example, Naomi Klein showed that in 1998, a review of economic zones, especially in China, showed that

workers for the companies Ralph Lauren, Adidas and Nike are paid 13 cents per hour, whereas the salary that can

ensure living in that area was 87 cents per hour, and in the USA a similar worker receives $10 per hour. Secondly,

multinationals are looking for new and untapped markets, they sometimes seek to increase sales by creating needs

in various target groups. An example is the activity of tobacco companies in the countries of the southern

hemisphere. Another example is the development of markets populated predominantly by children and young

people. In fact, the market of products and services for children and young people has grown to be one of the most

profitable and influential sectors. It is obvious that there is a profound effect on the rise, how we view childhood

(especially in the Nordic countries and the developed ones) increases the product of the culture of the media

consumer. This culture is supported through a direct contribution of the children, the so-called "Third World". Using

various media, commodities have become the centre of youth life in the West, building their identity and

relationships, their emotional and social universe. Adults and schools positioned negatively in this extended matrix,

where the pleasure and power of youth are constructed in such manner as to take place away from adults and

schools, and mainly this could happen with the help of goods. Of course such goods used in everyday life are almost

new. Writers like Erich Fromm commented on the phenomenon even in the early 1950. There was obviously an

acceleration and intensification (and globalization) significant, parallel to the advent of brands, with a focus on the

conditioning of children and young people to build identity around these brands. Thirdly, and related to the above,

one can sense the erosion of the public space by corporate activities. A significant area of pleasure, for example,

moved to associative forms, such as clubs and commercial activities. Young people are increasingly excluded from

public spaces and schools as long as they are offered the opportunity to waste their time in relative safety, to work

with mentors and to develop their talents and sense of self-worth. Like the concept of citizenship itself, the

recreational spaces are now privatized, in a bold attempt to make profit. Youth centres, public parks, basketball or

streets where the children played ball came out of the sphere of interest. The play areas are now rented to the

highest price bid. This situation has been well documented in the U.S. (especially by the analyst Robert Putnam) and

found a profound implication in the quality of life of the communities and in the wellbeing experienced by these

people. Fourthly, multinationals can have a significant influence in shaping policies in many national and

transnational government bodies, such as the EU and WB, both key players in the globalization process. They took

advantage of privatization and opening of the services. George Moonboot has shown that, analysing the situation in

the UK, for example the hospitals, the roads and the prisons were deliberately tailored to meet corporate demands

rather than people's needs. Biotechnology companies have sought to transform food chains in a controllable good

and have now a very strong and influencing link with government agencies and government ministers. Corporations

have become key factors in the decision making process in the EU and, with the help of the British government, as

shown in George Monbiot’s articles, they began to develop a transatlantic single market, controlled and managed by

the executive heads of the corporations. While national governments power over the globalization of macro-

economic forces was limited in the past years, the services and support given to the citizens was seen as a significant

opportunity by the corporations. In addition, national governments do have a considerable influence in the

international organizations and therefore have become the target of the multinational companies acting in this

arena.Economic Globalization is the increasing economic interdependence of national

economies across the world through a rapid increase in cross-border movement of goods, services, technology, and

capital. Whereas the globalization of business is centred on the diminution of international trade regulations as well

as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of

increasing economic integration between countries, leading to the emergence of a global marketplace or a single

world market. Depending on the paradigm, economic globalization can be viewed as either a positive or a negative

phenomenon. Economic globalization comprises the globalization of production, markets, competition, technology,

and corporations and industries. Current globalization trends can be largely accounted for by developed economies

integrating with less developed economies by means of foreign direct investment, the reduction of trade barriers as

well as other economic reforms, and, in many cases, immigration.

In 1944, 44 nations attended the Bretton Woods Conference with a purpose of stabilizing world currencies and

establishing credit for international trade in the post-World War II era. While the international economic order

envisioned by the conference gave way to the neo-liberal economic order prevalent today, the conference

established many of the organizations essential to advancement towards a close-knit global economy and global

financial system, such as the World Bank, the International Monetary Fund, and the International Trade

Organization.

As an example, Chinese economic reform began to open China to globalization in the 1980's. Scholars find that China

has attained a degree of openness that is unprecedented among large and populous nations, with competition from

foreign goods in almost every sector of the economy. Foreign investment helped to greatly increase product quality

and knowledge and standards, especially in heavy industry. China's experience supports the assertion that

globalization greatly increases wealth for poor countries. During 2005–2007, and again from 2010 to 2013, the Port

of Shanghai held the title as the world's busiest port.

In India, business process outsourcing has been described as the "primary engine of the country's development over

the next few decades, contributing broadly to GDP growth, employment growth, and poverty alleviation".

William I. Robinson's theoretical approach to globalization is a critique of Wallenstein’s World Systems Theory. He

believes that the global capital experienced today is due to a new and distinct form of globalization which began in

the 1980s. Robinson argues not only are economic activities expanded across national boundaries but also there is a

transnational fragmentation of these activities.] One important aspect of Robinson's globalization theory is that

production of goods are increasingly global. This means that one pair of shoes can be produced by six different

countries, each contributing to a part of the production process.

Political Globalisation in general, globalization may ultimately reduce the importance of

nation states. Supranational institutions such as the European Union, the WTO, the G8 or the International Criminal

Court replace or extend national functions to facilitate international agreement. In particular, the globalization of the

US grand strategy may have already reduced the importance of both nation states and the above-mentioned

supranational institutions. Some observers attribute a relative decline in US power to globalization, particularly due

to the country's high trade deficit. This led to a global power shift towards Asian states, particularly China, which

unleashed market forces and achieved tremendous growth rates. As of 2011, the Chinese economy was on track to

overtake the United States by 2025.

Increasingly, non-governmental organizations influence public policy across national boundaries, including

humanitarian aid and developmental efforts. Philanthropic organizations with global missions are also coming to the

forefront of humanitarian efforts; charities such as the Bill and Melinda Gates Foundation, Accion International, the

Acumen Fund (now Acumen) and the Echoing Green have combined the business model with philanthropy, giving

rise to business organizations such as the Global Philanthropy Group and new associations of philanthropists such as

the Global Philanthropy Forum. The Bill and Melinda Gates Foundation projects include a current multibillion-dollar

commitment to funding immunizations in some of the world's more impoverished but rapidly growing countries.

And hundreds of millions of dollars in the next few years to programs aimed at encouraging saving by the world's

poor. The Hudson Institute estimates total private philanthropic flows to developing countries at US$59 billion in

2010.

As a response to globalization, some countries have embraced isolationist policies. For example, the North Korean

government makes it very difficult for foreigners to enter the country and strictly monitors their activities when

they do. Aid workers are subject to considerable scrutiny and excluded from places and regions the government

does not wish them to enter. Citizens cannot freely leave the country.

Cultural Globalisation refers to the transmission of ideas, meanings, and values around

the world in such a way as to extend and intensify social relations.] This process is marked by the common

consumption of cultures that have been diffused by the Internet, popular culture media, and international travel.

This has added to processes of commodity exchange and colonization which have a longer history of carrying cultural

meaning around the globe. The circulation of cultures enables individuals to partake in extended social relations that

cross national and regional borders. The creation and expansion of such social relations is not merely observed on a

material level. Cultural globalization involves the formation of shared norms and knowledge with which people

associate their individual and collective cultural identities. It brings increasing interconnectedness among different

populations and cultures.

Cultural globalization has increased cross-cultural contacts, but may be accompanied by a decrease in the

uniqueness of once-isolated communities. For example, sushi is available in Germany as well as Japan, but Euro-

Disney outdraws the city of Paris, potentially reducing demand for "authentic" French pastry. Globalization's

contribution to the alienation of individuals from their traditions may be modest compared to the impact of

modernity itself, as alleged by existentialists such as Jean-Paul Sartre and Albert Camus. Globalization has expanded

recreational opportunities by spreading pop culture, particularly via the Internet and satellite television.

Religious movements were among the earliest cultural elements to globalize, being spread by force, migration,

evangelists, imperialists, and traders. Christianity, Islam, Buddhism, and more recently sects such as Mormonism are

among those religions which have taken root and influenced endemic cultures in places far from their origins.The growth of multinationals and the globalization of their impact have determined the advent of brands. The

astronomical growth of wealth and cultural influence of multinational companies over the past 15 years can be

attributed to an idea developed by the management theorists of the 80s: successful corporations must first produce

brands, as opposed to products. As Naomi Klein suggested, brand makers are primarily producers of the so-called

knowledge/ skills economy. One of the key elements that make companies multinational rather than transnational,

is the expansion into what they regard as external sources of materials, components and services. The logical

connection is that all corporations should not spend their finite resources in plants that cannot keep on equipment’s

that wear out and on employees that age and die, but they should focus instead their resources on virtual bricks and

mortar, in order to build brands.

Nike, Levi's, Coca Cola and other large companies spend huge sums in order to promote and support their brands.

One strategy is to try and establish a specific brand as an integral part of what people understand or want to see. As

we have already seen, regarding the operations of multinational companies, they have a major impact on children

and youth

And on education. It is an attempt to "own the young". Significantly, focusing on the brand rather than on the

intrinsic qualities of the product, also favours the multinational companies given the development conditions of the

market similar to the Achilles’ heel. Brand damage disproportionately affect sales and profitability in various areas

where that specific brand exists. If a brand becomes associated with failure and disgrace (egg a famous athlete that

was used to promote their brand is exposed as a drug user or when the brand becomes associated with child

exploitation) companies face major problems on the market. For a brand, the image is everything.

NATURE

Salient Features of Globalisation

1. Liberalisation:

It stands for the freedom of the entrepreneurs to establish any industry or trade or business venture, within their

own countries or abroad.

2. Free trade:

It stands for free flow of trade relations among all the nations. Each state grants MFN (most favoured nation) status

to other states and keeps its business and trade away from excessive and hard regulatory and protective regimes.

3. Globalisation of Economic Activity:

Economic activities are be governed both by the domestic market and also the world market. It stands for the

process of integrating the domestic economy with world economies.

4. Liberalisation of Import-Export System:

It stands for liberating the import- export activity and securing a free flow of goods and services across borders.

5. Privatisation:

Keeping the state away from ownership of means of production and distribution and letting the free flow of

industrial, trade and economic activity across borders.

6. Increased Collaborations:

Encouraging the process of collaborations among the entrepreneurs with a view to secure rapid modernisation,

development and technological advancement.

7. Economic Reforms:

Encouraging fiscal and financial reforms with a view to give strength to free world trade, free enterprise, and market

forces.

Globalisation accepts and advocates the value of free world trade, freedom of access to world markets and a free

flow of investments across borders. It stands for integration and democratization of the world’s culture, economy

and infrastructure through global investments.

TYPES OF GLOBAL STRATEGIES

There are three main international strategies available:

(1) MULTI DOMESTIC STRATEGY

(2) GLOBAL STRATEGY

(3) TRANSNATIONAL STRATEGY

Each strategy involves a different approach to trying to build efficiency across nations and trying to be

responsiveness to variation in customer preferences and market conditions across nations.

MULTI DOMESTIC STRATEGY

A multi-domestic strategy is a strategy by which companies try to achieve maximum local responsiveness by

customizing both their product offering and marketing strategy to match different national conditions.

Production, marketing and R&D activities tend to be established in each major national market where business is

done. A firm using a multidomestic strategy sacrifices efficiency in favour of emphasizing responsiveness to local

requirements within each of its markets.

Rather than trying to force all of its American-made shows on viewers around the globe, MTV customizes the

programming that is shown on its channels within dozens of countries, including India, New Zealand, Portugal and

Pakistan. Similarly, food company H. J. Heinz adapts its products to match local preferences. Because some Indians

will not eat garlic and onion, for example, Heinz offers them a version of its signature ketchup that does not include

these two ingredients.CHARACTERSTICS

Customized product to different countries.

Less political risk.

Minimized exchange rate.

High quality due to backward integration.

Innovation from local R&D.

Entrepreneurial spirit.

Product differentiation.

GLOBAL STRATEGY

Global strategy involves thinking in an integrated way about all aspects of a business-its suppliers, production sites,

markets, and competition.

It involves assessing every product or service from the perspective of both domestic and international market

standards. It means embedding international perspectives in product formulations at the point of design, not as

afterthoughts.

It means meeting world standards even before seeking world markets and being world class even in local markets.

It means deepening the company's understanding of local and cultural differences in order to become truly global.

A firm using a global strategy sacrifices responsiveness to local requirements within each of its markets in favor of

emphasizing efficiency. This strategy is the complete opposite of a multidomestic strategy. Some minor

modifications to products and services may be made in various markets, but a global strategy stresses the need to

gain economies of scale by offering essentially the same products or services in each market.

Microsoft, for example, offers the same software programs around the world but adjusts the programs to match

local languages. Similarly, consumer goods maker Procter & Gamble attempts to gain efficiency by creating

global brands whenever possible.

Global strategies also can be very effective for firms whose product or service is largely hidden from the customer’s

view, such as silicon chip maker Intel. For such firms, variance in local preferences is not very important

CHARACTERSTICS

Strong global distribution network.

Financial control. Cost

efficient. Coordinated

activities.

Faster product development.

TRANSNATIONAL STRATEGY

A firm using a transnational strategy seeks a middle ground between a multidomestic strategy and a global strategy.

Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various

countries. Some value chain activities are standardized and are performed in country locations others are

nationally adapted and performed in the local market.

An international business structure where a company’s global business activities are coordinated via co-operation

and interdependence between its head office, operational divisions and internationally located subsidiaries or

retail outlets.

A transnational strategy offers the centralization benefits provided by a global strategy along with the local

responsiveness characteristic of domestic strategies. For example, large fast-food chains such as McDonald’s and

Kentucky Fried Chicken (KFC) rely on the same brand names and the same core menu items around the world.

These firms make some concessions to local tastes too. In France, for example, wine can be purchased at

McDonald’s.This approach makes sense for McDonald’s because wine is a central element of French diets.

Globalization means increasing the interdependence, connectivity, and integration on a global level, with respect to

the social, cultural, political, technological, economic, and ecological levels. It is the collaboration of countries to

provide a boost to trade practices, and also to reduce cultural differences. Its various advantages can be felt all

across the globe by one and all, and also to a very large extent in our daily lives.

Obviously, now we understand that globalization is here to stay. Here are the most common and important

advantages that globalization, over time, has brought about for mankind. These have been listed in no

particular order, and are all vital in their own way.

ADVANATGES

Peaceful Relations

Most of the countries have resorted to trade relations with each other in order to boost their economy, leaving

behind any bitter past experiences if any. Nations now try to raise capital and fortify their stand in international

trade, rather than hosting a war. Thus, globalization has induced international peace and security in a big way.

Free Trade

Free trade is a policy in which a country does not levy taxes, duties, subsidies or quota on the import/export of

goods or services from other countries. There are countries which have resolved to free trade in specific regions. This

allows consumers to buy goods and services, comparatively at a lower cost.

Global Connectivity

Globalization has promoted international connectivity. With the use of the Internet, the world has definitely become

a smaller place. There has been exchange of thoughts and ideas which has morally boosted and interlinked the

mindset of people all round the world.

New Markets

The opportunities for new markets has increased dramatically. Numerous companies have started investing in

different countries and luring customers for their brands. These ever-expanding markets have helped countries to

raise capital in terms of foreign domestic investments, thus improving the economy of the country.

Employment Opportunities

one of the most advantageous factors of globalization is that it fosters the generation of employment. This happens

due to the emergence of new companies and new markets, where lots of skilled and unskilled labor is required.

Immigration between countries also increases, providing better opportunities for people all round the world. By

providing employment, globalization helps in increasing the standard of living of the people, and also reduces

poverty.

Quality Products

the competition among different companies finds place at an international level. It becomes important for the

companies to focus on quality goods and services, in order to have a strong foothold in the market. The consumer is

benefited in the process, and gets quality products at cheaper rates. He/she also gets the opportunity to select his

goods from a large variety available in the market

Environmental Protection

Mutual trade carried out by countries has brought about an understanding for the protection of the environment

from which they benefit so much. It has been accepted by most countries that action needs to be taken in saving

natural resources and wildlife, without thinking about the boundaries that separate them. Global environmental

problems like cross-boundary pollution, over-fishing in the oceans, climate change, etc., are solved by discussions

and conventions.

Good for Developing Nations

it is claimed that globalization increases the economic prosperity of developing nations. Developed countries invest

in such countries with an aim of capturing new markets, which helps them improve their infrastructure and

technologies to international levels. A lot of capital is invested in such projects, which in turn proves fruitful to the

economy of the developing nation as well.

Equality for All

Globalization has helped in creating international criminal courts, and international justice movements are also

launched to provide justice to people at a global level. Disputes are solved through global standards such as patents,

copyright laws, and world trade agreements. Thus, it has ensured that people do not get discriminated with regard

to country, caste, creed or sex.

Ease of Transportation

With the advent of globalization, there has been an immense increase in the transportation of goods and services

worldwide. Things which took weeks for conveyance, can now easily be availed within a couple of days. Due to the

development of containerization for ocean shipping, transportation costs are reduced to a great extent, lowering the

cost of products in world markets.

Travel and Tourism

Globalization has promoted tourism to great heights. There are many places that have tourism as their main source

of capital generation. International trade among different countries also helps in increasing the number of tourists

that visit different places around the world.

Unity in Diversity

Globalization has helped in bringing about integrity and social understanding everywhere. The dream for a global

village becomes realistic after looking at the impact of globalization. It has helped in removing some barriers that

had kept the world divided on various grounds. There has been propagation of democratic ideas among countries.

Cross-cultural contacts grow and cultural diffusion takes place, which helps in minimizing differences, and promotes

companionship.

External borrowing

it has often been seen that a poor country is unable to provide adequate financing to its companies, which proves to

an obstacle in the development of the country on the whole. With the help of globalization, there is opportunity for

corporate, national, and sub-national borrowers to have better access to external finance, with facilities such as

external commercial borrowing and syndicated loans.

Education

With educational institutions spread across the globe, it has become easier to move from home countries for better

education opportunities. This has led to integration of cultures and people from different educational backgrounds.

Countries that are labor intensive as well as developing nations have accrued the most benefits from this.

DISADVANTAGES

1. In a way, globalization has contributed towards increasing the gap between the rich and the poor. Rich and

wealthy people are able to exercise more control over the national resources through the application of

science and technology.

The environment has suffered greatly due of globalization. On one hand, the increase in traffic between

countries has polluted the tourist destinations. On the other hand, the poisonous gases released into the air

by large industries have caused environmental pollution.

The natural resources of the earth have been exploited beyond the tolerable limit. Some places on earth,

which was once rich in minerals and forests can no longer claim their richness.

Many communities failed to preserve their old tradition, custom, and culture. Being attracted by the culture

of developed nations, many people in under-developed nations have shed their traditional dress, food, and

rituals. This is yet another disadvantage of Globalization.

Local businesses, hand-loom industry, Cottage and small-scale industry suffered a lot due to globalization. The

highly specialized and efficient multi-national companies take advantages of large-scale production and put

products at throwaway prices. The local industries could not compete with their global counterpart.

The global economy is now inter-connected. The economic downfall of one major economic nation adversely

affects the entire global community.

Globalization has caused specialization of labour. On one hand, there is an increase in demand for skilled

labours. However, it has caused enough disadvantages for the unskilled labour group. There are few

employment opportunity for unskilled labours in a global environment.

The more technologically advanced countries are able to sell their products to less-developed countries.

Hence, the less developed countries become dependent upon the superior nations.

The adverse effect of globalization is not restricted to financial and economical imbalance. Last century has

witness spread of diseases from one country to another country. Diseases spread to local places when a

diseased person from a foreign country comes in contact with local inhabitants.

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10. Globalization is responsible for the emergence of large number of multi-national companies. Very often, it is

found that they do not provide good working condition to the workers. Further, forests have been cut for

setting up large industries. The industrial discharges have widely contributed towards environmental

degradation.

OBSTACLES TO GLOBALISATION

Government policy and procedures: Government policy and procedures in India are among the most

complex, confusing and cumbersome in the world. Even after the much publicised liberalisation, they do not

present a very conducive situation. One prerequisite for success in globalisation is swift and efficient action.

Government policy and the bureaucratic culture in India in this respect are not that encouraging.

High Cost: High cost of many vital inputs and other factors like raw materials and intermediates, power,

finance infrastructural facilities like port etc., tend to reduce the international competitiveness of the Indian

Business.

Poor Infrastructure: Infrastructure in India is generally inadequate and inefficient and therefore very costly.

This is a serious problem affecting the growth as well as competitiveness.

Obsolescence: The technology employed, mode and style of operations etc., are, in general, obsolete and

these seriously affect the competitiveness.

Resistance to Change: There are several socio-political factors which resist change and this comes in the way

of modernisation, rationalisation and efficiency improvement. Technological modernisation is resisted due

to fear of unemployment. The extent of excess labour employed by the Indian industry is alarming. Because

of this labour productivity is very low and this in some cases more than offsets the advantages of cheap

labour.

Poor Quality Image: Due to various reasons, the quality of many India products is poor. Even when the

quality is good, the poor quality image India has becomes a handicap.

Supply Problems: Due to various reasons like low production capacity, shortages of raw materials and

infrastructures like power and port facilities, Indian companies in many instances are not able to accept large

orders or to keep up delivery schedules.

Small Size: Because of the small size and the low level of resources, in many cases Indian firms are not able

to compete with the giants of other countries. Even the largest of the Indian companies are small compared

to the multinational giants.

Lack of Experience: The general lack of experience in managing international business is another important

problem.

Limited R&D and Marketing Research: Marketing Research and R&D in other areas are vital inputs of

development of international business. However, these are poor in Indian Business. Expenditure on R&D in

India is less than one per cent of GNP while it is two to three per cent in most of the developed countries.

Growing Competition: The competition is growing not only from the firs in the developed countries but also

from the developing country firms. Indeed, the growing competition from the developing country firms is a

serious challenge to India’s international business.

Trade Barriers: Although the tariff barriers to trade have been progressively reduced thanks to the

GATT/WTO, the non-tariff barriers have been increasing, particularly in the developed countries. Further, the

trading blocs like the NAFTA, EC etc., could also adversely affect India’s business.

EFFECTS OF GLOBALISATION

ON

INDIAN ECONOMY

Impact of Globalization to Indian EconomyGlobalization offers both opportunities and challenges for our country in many ways. It has created significant

opportunities for manufacturing, agriculture, service sectors and many others. Besides, there has been significant

inflow of foreign investments in to India. The challenges of globalization lies not in stopping the expansion of global

market, but in setting rules and institutions for better governance at local, national, regional and global levels.

Further, globalization is not just to preserve the advantages of global market and competition but also to provide

enough space for human, community and environmental resources to ensure that globalization works for people

and not just for profits. However, this section would highlight how globalization has its implications on India’s trade

and investment.

1. Favorable impact on overall rate of economy. This is a major improvement given that India’s growth rate in

70’s was only 3% than Brazil and Indonesia (their GDP being almost twice)

Annual growth rate almost in 80’s to 5.9% and improved India’s global position.

Service sector now contributes to maximum part of GDP with contribution of more than 57% with ranking

18th among leading exporter of services.

Boosting agricultural growth through diversification and development of agro processing.

World class infrastructure.

Westernization of local culture.

Destruction of organic agriculture and depletion of natural resources.

Empowering population through universal education and health care.

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Impact of Globalization on Students and Education

Sectors:

Due to globalization, the availability of study books and information on the internet or the World Wide Web (www)

have increased tremendously. However, the exorbitant cost factors have made higher and specialised education

beyond the reach of poor and middle class students.

Hundreds of foreign universities have started collaborating with Indian universities and study institutions. This has

affected the course fees. For Engineering, Medical and Management studies, the course fees are hovering around

Rs.20 to Rs.50 lakhs. Intelligent students from middle and poor class may have to settle for daily wages earning in

future as they cannot afford for the same.

Impact on Health Sectors:

It is unbelievable that in India, poor people have to spend a minimum of Rs.200 for a mere seasonal cold or minor

stomach ailments, thanks to the multinationals pharmaceutical companies engaged in sky rocketing cost of common

medicines under their brand names.

The private sector hospitals like Apollo, Medicare will be only too happy to prepare a bill of Rs.5 lakh to Rs.10 lakh

for heart or Kidney operation. The monitoring of health electronically through the internet will worsen the

situation further in the years to come. Death will be the easiest option for poor following the effect of

globalization in health sector.

Impact on Agricultural Sector:

The globalization of trade in the agricultural sector is perhaps proving to be a big blunder. The farmers will have to

pay a very heavy price, for better variety of imported seeds having resistance to diseases, because of the

patent rights imposed by WTO.

Over and above, the Indian farmer cannot export their products to rich countries because of inferior technology and

stringent quality parameters imposed by foreign consumers. The large scale suicide by Indian farmers in Karnataka,

Punjab and Haryana under the burden of heavy loans is directly attributed to this.

The Indian agriculture is almost on its deathbed. The minimum cost of eatable rice is Rs.12 per kg and apples from

Australia at Rs.100 to Rs.150 per kg cannot be afforded by poor.

Impact on Employment Sector:The employment scenario in India is probably the worst in recent years due to globalization. The restrictions of use

of child labour and fair pay to workers have a badly affected the traditional industries like cottage, handloom,

artisans and carving, carpet, jewellery, ceramic, and glassware etc., where the specialised skills inherited for

generations were passed on to the next generation from the early age of 6 to 7 years. The globalization and trade

restrictions under the influence of WTO have virtually killed business in these sectors.